10 U.S. Code § 7430 - Disposition of products

(a)In administering the naval petroleum reserves under this chapter, the Secretary shall use, store, or sell the petroleum produced from the naval petroleum reserves and lands covered by joint, unit, or other cooperative plans.

(b)

(1)Subject to paragraph (2) and notwithstanding any other provision of law, each sale of the United States share of petroleum shall be made by the Secretary at public sale to the highest qualified bidder, at such time, in such amounts, and after such advertising as the Secretary considers proper and without regard to Federal, State, or local regulations controlling sales or allocation of petroleum products. Each sale of the United States share of petroleum shall be for periods of not more than one year, except that a sale of natural gas may be made for a period of more than one year.

(2)The Secretary may not sell any part of the United States share of petroleum produced from Naval Petroleum Reserves Numbered 2 and 3 at a price less than the current sales price, as estimated by the Secretary, of comparable petroleum in the same area.

(3)For purposes of paragraph (2), the term “petroleum” does not include natural gas liquids.

(c)In no event shall the Secretary permit the award of any contract which would result in any person obtaining control, directly or indirectly, over more than 20 percent of the estimated annual United States share of petroleum produced from Naval Petroleum Reserve Numbered 1.

(d)Each proposal for sale under this title shall provide that the terms of every sale of the United States share of petroleum from the naval petroleum reserves shall be so structured as to give full and equal opportunity for the acquisition of petroleum by all interested persons, including major and independent oil producers and refiners alike. When the Secretary, in consultation with the Secretary of the Interior, determines that the public interests will be served by the sale of petroleum to small refiners not having their own adequate sources of supply of petroleum, the Secretary is authorized and directed to set aside a portion of the United States share of petroleum produced for sale to such refiners under the provisions of this section for processing or use in such refineries, except that—

(1)none of the production sold to small refiners may be resold in kind;

(2)production must be sold at a cost of not less than the prevailing local market price of comparable petroleum;

(3)the set-aside portion may not exceed 25 percent of the estimated annual United States share of the total production from all producing naval petroleum reserves; and

(4)notwithstanding the provisions of subsection (b), the Secretary may, at his discretion if he deems it to be in the public interest, prorate such petroleum among such refiners for sale, without competition, at not less than the prevailing local market price of comparable petroleum.

(e)Any petroleum produced from the naval petroleum reserves, except such petroleum which is either exchanged in similar quantities for convenience or increased efficiency of transportation with persons or the government of an adjacent foreign state, or which is temporarily exported for convenience or increased efficiency of transportation across parts of an adjacent foreign state and reenters the United States, shall be subject to all of the limitations and licensing requirements of the Export Administration Act of 1979 (50 App. U.S.C. 2401 et seq.) and, in addition, before any petroleum subject to this section may be exported under the limitations and licensing requirement and penalty and enforcement provisions of the Export Administration Act of 1979, the President must make and publish an express finding that such exports will not diminish the total quality or quantity of petroleum available to the United States and that such exports are in the national interest and are in accord with the Export Administration Act of 1979.

(f)During the period of production or any extension thereof authorized by section
7422(c) of this title, the consultation and approval requirements of section
7431(a)(3) of this title are waived.

(g)

(1)Prior to the promulgation of any rules and regulations, plans of development and amendments thereto, and in the entering and making of contracts and operating agreements relating to the development, production, or sale of petroleum in or from the reserves, the Secretary shall consult with and give due consideration to the views of the Attorney General of the United States with respect to matters which may affect competition.

(2)No contract or operating agreement may be made, issued, or executed under this chapter until at least 15 days after the Secretary notifies the Attorney General of the proposed contract or operating agreement. Such notification shall contain such information as the Attorney General may require in order to advise the Secretary as to whether such contract or operating agreement may create or maintain a situation inconsistent with the antitrust laws. If, within such 15-day period, the Attorney General advises the Secretary that a contract or operating agreement may create or maintain a situation inconsistent with the antitrust laws, then the Secretary may not make, issue, or execute that contract or operating agreement.

(h)Nothing in this chapter shall be deemed to confer on any person immunity from civil or criminal liability, or to create defenses to actions, under the antitrust laws.

(4)sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8 and 9); and

(5)sections 2, 3, and 4 of the Act of June 19, 1936 (commonly referred to as the “Robinson-Patman Act”) (15 U.S.C. 13a, 13b, and 21a).

(j)Any pipeline which accepts, conveys, or transports any petroleum produced from Naval Petroleum Reserves Numbered 1 or Numbered 3 shall accept, convey, and transport without discrimination and at reasonable rates any such petroleum as a common carrier insofar as petroleum from such reserves is concerned. Every contract entered into by the Secretary for the sale of any petroleum owned by the United States which is produced from such reserves shall contain provisions implementing the requirements of the preceding sentence if the contractor owns a controlling interest in any pipeline or any company operating any pipeline, or is the operator of any pipeline, which carries any petroleum produced from such naval petroleum reserves. The Secretary may promulgate rules and regulations for the purpose of carrying out the provisions of this section and he, or the Secretary of the Interior where the authority extends to him, may declare forfeit any contract, operating agreement, right-of-way, permit, or easement held by any person violating any such rule or regulation. This section shall not apply to any natural gas common carrier pipeline operated by any person subject to regulation under the Natural Gas Act (15 U.S.C. 717 et seq.) or any public utility subject to regulation by a State or municipal regulatory agency having jurisdiction to regulate the rates and charges for the sale of natural gas to consumers within the State or municipality.

(k)

(1)With respect to all or any part of the United States share of petroleum produced from the naval petroleum reserves, the President may direct that the Secretary—

(A)place that petroleum in the Strategic Petroleum Reserve as authorized by sections 151 through 166 of the Energy Policy and Conservation Act (42 U.S.C. 6231–6246); or

(B)exchange, directly or indirectly, that petroleum for other petroleum to be placed in the Strategic Petroleum Reserve under such terms and conditions and by such methods as the Secretary determines to be appropriate, without regard to otherwise applicable Federal procurement statutes and regulations.

(2)The requirements of section 159 of the Energy Policy and Conservation Act (42 U.S.C. 6239) do not apply to actions taken under this subsection.

(l)

(1)Notwithstanding any other provision of this chapter (but subject to paragraph (2)), during any period in which the production of petroleum is authorized from Naval Petroleum Reserves Numbered 1, 2, or 3, the Secretary, at the request of the Secretary of Defense, may provide any portion of the United States share of petroleum so produced to the Department of Defense for its use, exchange, or sale in order to meet petroleum product requirements of the Department of Defense.

(2)Petroleum may be provided to the Department of Defense under paragraph (1) either directly or by such exchange as the Secretary deems appropriate. Appropriate reimbursement reasonably reflecting the fair market value shall be provided by the Secretary of Defense for petroleum provided under this subsection.

(3)Any exchange made pursuant to this subsection may be made without regard to otherwise applicable Federal procurement statutes and regulations.

(4)Paragraph (1) does not apply to any petroleum set aside for small refiners under subsection (d) or placed in the Strategic Petroleum Reserve under subsection (k).

In subsection (a) the words “subject to the applicable limitations and restrictions of this Act” are omitted as surplusage and the words “in administering” are inserted.

In subsection (b) the words “under this section” are substituted for the words “from the naval reserves” to make it clear that the requirements of this subsection apply to sales of petroleum, gas, and other hydrocarbons from lands outside petroleum reserve numbered 1 covered by joint, unit, or other cooperative plans as well as the sale of those products from the naval reserves proper. Subsection (a) is the only authority for the sale of petroleum, gas, and other hydrocarbons from the naval petroleum reserves.

References in Text

The Export Administration Act of 1979, referred to in subsec. (e), is Pub. L. 96–72, Sept. 29, 1979, 93 Stat. 503, which is classified principally to section
2401 et seq. of the Appendix to Title 50, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 2401 of the Appendix to Title 50 and Tables.

The Sherman Act, referred to in subsec. (i)(1), is act July 2, 1890, ch. 647, 26 Stat. 209, as amended, which is classified to sections
1 to
7 of Title
15, Commerce and Trade. For complete classification of this Act to the Code, see Short Title note set out under section
1 of Title
15 and Tables.

The Clayton Act, referred to in subsec. (i)(2), is act Oct. 15, 1914, ch. 323, 38 Stat. 730, as amended, which is classified generally to sections
12,
13,
14 to
19,
21, and
22 to
27 of Title
15, and sections
52 and
53 of Title
29, Labor. For further details and complete classification of this Act to the Code, see References in Text note set out under section
12 of Title
15 and Tables.

The Federal Trade Commission Act, referred to in subsec. (i)(3), is act Sept. 26, 1914, ch. 311, 38 Stat. 717, as amended, which is classified generally to subchapter I (§ 41 et seq.) of chapter
2 of Title
15. For complete classification of this Act to the Code, see section
58 of Title
15 and Tables.

Sections 73 and 74 of the Wilson Tariff Act, referred to in subsec. (i)(4), are sections 73 and 74 of act Aug. 27, 1894, ch. 349, 28 Stat. 570, which enacted sections
8 and
9, respectively, of Title
15.

Act of June 19, 1936, referred to in subsec. (i)(5), is act June 19, 1936, ch. 592, 49 Stat. 1526, popularly known as the Robinson-Patman Antidiscrimination Act and also as the Robinson-Patman Price Discrimination Act, which enacted sections
13a,
13b, and
21a of Title
15 and amended section
13 of Title
15. For complete classification of this Act to the Code, see Short Title note set out under section
13 of Title
15 and Tables.

The Natural Gas Act, referred to in subsec. (j), is act June 21, 1938, ch. 556, 52 Stat. 821, as amended, which is classified generally to chapter 15B (§ 717 et seq.) of Title 15. For complete classification of this Act to the Code, see section
717w of Title
15 and Tables.

Amendments

2001—Subsec. (b)(2). Pub. L. 107–107substituted “at a price less than the current sales price” for “at a price less than the higher of— (A) the current sales price”, substituted a period for “; or” after “petroleum in the same area”, and struck out subpar. (B) which read as follows: “the price of petroleum being purchased for the Strategic Petroleum Reserve, minus the cost of transporting petroleum from the naval petroleum reserve concerned to the nearest storage area of the Strategic Petroleum Reserve, with adjustments for the difference in the quality of the petroleum being purchased for the Strategic Petroleum Reserve and petroleum being produced from the naval petroleum reserve concerned.”

1980—Subsec. (b). Pub. L. 96–294, § 804(a), struck out “for periods of not more than one year,” after “qualified bidder,” and inserted last sentence limiting sales of the United States share of petroleum to periods of not more than one year, except for sales of natural gas.

1976—Subsec. (a). Pub. L. 94–258substituted provisions setting forth requirements for Secretary in administering naval petroleum reserves under this chapter, for provisions setting forth requirements for Secretary of the Navy in administering naval petroleum and oil shale reserves under this chapter.

Subsec. (b). Pub. L. 94–258inserted “Notwithstanding any other provision of law” before “each sale”, reference to United States share of petroleum, provision relating to periods of sale, and provision exempting Federal, State, or local regulations controlling sales or allocation of petroleum products, and struck out applicability to sales of gas, other hydrocarbons, oil shale, or products therefrom.

1962—Subsec. (a). Pub. L. 87–796included provision for administration of oil shale reserves, required the Secretary of the Navy to use, store, sell, or exchange oil shale and products therefrom produced from oil shale reserves for other petroleum or refined products, and deleted provision which required the Secretary to use, store, sell, or exchange gas products from lands in the South Barrow gas field of naval petroleum reserve numbered 4 for other petroleum or refined products.

Pub. L. 87–599required the Secretary of the Navy to use, store, sell, or exchange gas products from lands in the South Barrow gas field of naval petroleum reserve numbered 4 for other petroleum or refined products.

Functions vested in President by subsec. (k) of this section delegated to Secretary of Energy by section 1–102 of Ex. Ord. No. 12231, Aug. 4, 1980, 45 F.R. 52139, set out as a note under section
6240 of Title
42, The Public Health and Welfare.